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Filling the void of Indian Point: The debate on what comes next

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Essential Energy Insights - February 2021

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Message in a (Word)Cloud

Six trends shaping the industries and sectors we cover in 2021

Six trends shaping the industries and sectors we cover in 2021


Filling the void of Indian Point: The debate on what comes next

New York's largest nuclear power plant is slated to shut down within four years, but the debate continues on what will replace the approximately 2,070-MW generation capacity of Entergy Corp.'s Indian Point 2 and Indian Point 3 reactors.

Gov. Andrew Cuomo's administration maintains that 700 MW of transmission upgrades and efficiency measures already in service, 1,000 MW of hydropower and other "fully-permitted and available" clean energy sources will supply the power now produced by the uneconomic nuclear power plant, which is located about 36 miles north of New York City. Indian Point's last reactor will shut down by April 2021.

Backing up Cuomo is a new report by Synapse Energy Economics, Inc. that argues New York can replace Indian Point cost-effectively, with zero additional carbon dioxide emissions and without risking grid reliability, by scaling up renewable energy resources and adopting more aggressive policies aimed at boosting energy efficiency in buildings. Commissioned by two environmental groups, the Natural Resources Defense Council and Riverkeeper, the report also champions the construction of Transmission Developers Inc.'s already permitted Champlain Hudson Power Express transmission line to deliver 1,000 MW of emission-free hydropower across 336 miles from Hydro-Québec in Canada directly into New York City.

"Recent transmission improvements coupled with energy efficiency gains, cheaper renewables and lower demand estimates show that New York is already on its way to a reliable, affordable, clean energy future," explained Paul Gallay, president of Riverkeeper, in a news release. "We'll have plenty of energy to keep the lights on — even on the hottest days — and New Yorkers won't face big increases in electric bills."

Decarbonize without de-growth

The report claims that the loss of Indian Point will lead to less than a 1% increase in overall whole electric system costs. Under one scenario examined in the study, more efficient energy use alone by 2023 could displace all current consumption met by Indian Point if more aggressive energy efficiency investments are pursued than under levels envisioned in Cuomo's clean energy standard initiative.

Gil Quiniones, CEO of the New York Power Authority, said in a recent interview that the key to replacing Indian Point is to accelerate renewable growth while securing resource adequacy and transmission in Westchester County, the Lower Hudson Valley and New York City. As America's largest state-owned electric utility, he said, NYPA is already investing almost $800 million to modernize and extend the life of its transmission system to help achieve New York's targets of procuring 50% of its electricity from renewables and developing 2.4 GW of offshore wind by 2030.

"The ability to decarbonize without shredding your economy, without de-growthing your economy, is fundamentally based on surpluses somewhere that are not based on emitting carbon," countered Mark Nelson, an energy and environmental analyst at Environmental Progress, a pro-nuclear advocacy group, in an interview. "When New York gets rid of the facility at Indian Point, which fundamentally adds to the economic surplus without burning carbon, it is extraordinarily difficult to move back from that [emissions increase]."

According to Nelson, under the most optimistic scenario, the loss of Indian Point will increase greenhouse gas emissions by 4%, or 7 million metric tons, per year. The easiest way to cut those additional emissions would be deindustrialization, he said, but "it will not get you re-elected to meet your carbon targets by de-growthing your economy."

A half-ton gorilla

"You are dealing with the thousand-pound gorilla in electric production in the Hudson Valley that provides a third of the electricity in New York City," said Gavin Donohue, CEO of the Independent Power Producers of New York, in an interview. The lobbyist for the state's competitive generators said the suggestion that Indian Point can be replaced with intermittent renewables alone "doesn't pass the laugh test," while more expensive hydropower imports from Canada are economically unjustifiable in an era of low natural gas prices.

The Champlain Hudson Power Express would exclude upstate renewable generators and could make New York state less competitive, Donohue claimed. As alternative replacements for Indian Point, he instead recommended two combined-cycle natural gas projects in the Lower Hudson Valley: Advanced Power Services (NA) Inc.'s approximately 1,070-MW Cricket Valley Energy project and Competitive Power Ventures Holdings LLC's 720-MW dual-fuel CPV Valley Energy Center plant.

The two Hudson County gas plant projects are under construction. CPV Valley is slated to be in service February 2018, while Cricket Valley is expected to start operations late 2019. The CPV project, however, is at the center of an ongoing federal case against a former CPV senior executive for bribing Cuomo's former executive secretary in exchange for permit approvals.

Cheap talk

There is also a third combined-cycle project: NRG Energy Inc.'s permitted 1,040-MW Astoria Repowering CC project in New York City. NRG first offered the proposed plant as a replacement for Indian Point in 2013. After the early retirement announcement of Indian Point, NRG spokesman David Gaier said in a statement that NRG is "evaluating options" for the unbuilt project, and recommended the establishment of a "long-needed" forward capacity in New York to help spur development of "new, cleaner and more efficient generation, including renewables."

Unfortunately for these developers, Cuomo is no fan of natural gas-fired generation, as evidenced by his December 2014 ban of hydraulic fracturing of Marcellus Shale gas deposits in upstate New York. On the same day that the deal to close Indian Point was announced, Cuomo declared in his 2017 State of the State address that New York "must double down by investing in the fight against dirty fossil fuels and fracked gas from neighboring states."

Skeptical, Nelson believes Indian Point will still be replaced with carbon-emitting natural gas generators that, like Indian Point, will be sufficiently close enough to New York City to ensure the city's electricity prices are not five times as high as other parts of the state.

"Gas will flow, the turbines will turn and the gas will be combusted; and that will just happen," said Nelson. "All talk in the world is cheap compared to the requirements of the electricity system."